Residential Property Tax Research Articles

Customizing a mass appraisal model for residential property tax assessment: a hedonic regression approach in Bahir Dar city, Ethiopia

PurposeThe paper aims to estimate the house rental values for the purpose of customizing mass appraisals in Bahir Dar City, Ethiopia. It seeks to identify the critical factors affecting the rental values of residential properties and customize a mass appraisal model for such properties. The study focuses on identifying attributes that significantly affect house rental values.Design/methodology/approachThe paper adopted a survey research design, utilizing a survey questionnaire, expert group discussion and document analysis. The data were analyzed using thematic, descriptive and inferential statistical analysis, including correlation and hedonic regression analysis.FindingsAmong the variables included in the model, the number of rooms, availability of schools, land value grading, type of nearest road, housing typology, built-up area, plot area, walling material, traveling cost and fencing materials were the most significant factors for predicting the annual rental value of residential properties in the city.Research limitations/implicationsThe findings of this study will provide valuable insights to tax assessors, property owners and local government authorities, including municipalities, concerning the key determinants of the rental values of residential properties. Besides, these findings will serve as a useful tool for valuers and researchers in the field of property value modeling.Originality/valueThis study represents the first attempt to develop a framework for mass appraisal of residential properties using annual rental values in the Ethiopian context.

Citizen Preferences and Awareness of Tax Revenue Options: Public Opinion on South Carolina’s “Tax Swap”

Tax complexity makes it challenging for citizens to understand how taxes imposed by state and local governments affect their tax bill. This paper considers citizen awareness and preferences for tax revenue options in the presence of tax features that increase complexity. The researchers mailed a survey questionnaire to a random sample of South Carolina voters measuring their level of knowledge and preferences for school tax funding during the last half of 2021. A sizable majority of respondents report the property tax as their least preferred option to fund school operations when compared to sales tax or commercial property tax, with variation in support by ideology, homeownership, and partisanship. However, respondents are broadly uninformed of current school tax funding mechanisms regardless of college degree attainment, ideology, and other important indicators. Most respondents are not aware of the “tax swap” that replaced residential property tax with a one-cent sales tax to fund South Carolina school operations.

Drivers of COVID-19 protest across localities in Israel: a machine-learning approach

ABSTRACT Anti-government protests emerged globally in response to COVID-19 countermeasures. What are the key drivers of these pandemic-related protests, and to what extent do they differ from the drivers of non-COVID protests? We examine these questions in the context of Israel, which faced a growing political crisis at the start of the pandemic, effectively blurring the distinction between different causes of protest. Our data features 1,922 protests across 189 Israeli localities for the period between March and July 2022. Using a machine learning approach, we find that all protests, regardless of whether they were directly related to the pandemic or not, were motivated by the same set of key indicators – albeit with the ranking of drivers for COVID-related protests inverted for non-COVID protests. Local infection rates and government responses were more pronounced for the former, whereas differences in residential and commercial property taxes, access to affordable housing, quality of education and demography were among the most important drivers for the latter. Our analysis underscores the role that local governments played in managing the pandemic, and demonstrates that variation in socioeconomic conditions had an important effect on the incidence of protests across Israel.

Designing and implementing a local residential property tax from scratch: lessons from the Republic of Ireland

Assigning recurrent taxes on immovable property to cities, municipalities, and rural districts is a common practice around the world. The Republic of Ireland is no different, with its annual taxes on real property assigned to local government. Following the 2008 financial crisis and the austerity era that ensued, Ireland’s property taxes underwent major reform, most notably the design and implementation of a new residential property tax 35 years after abolition of the previous system of ‘rates’ on residential properties. In this paper the new or different features of Ireland’s residential property tax are outlined, including the use of self-assessment and valuation bands, innovative payment methods and also the multiple compliance mechanisms for taxpayers. While recognising the importance of country-specific and local circumstances in property tax design, the paper concludes that elements of Ireland’s new residential property tax have potential lessons for other jurisdictions contemplating similar tax reform. These relate to the key tax principles of simplicity and public acceptability, and on specific design features of assessment and valuation, and collection and compliance.

A review of Ireland’s Local Property Tax

Abstract Property taxes are common in countries around the world. Until recently, Ireland was an exception as there was no annual tax on residential property. This paper is a review of the Local Property Tax (LPT) system that was introduced in 2013 and had its first property revaluations in 2021. Using the lens of municipal finance and tax assignment, the rationale, history, features and administration of this new residential property tax are outlined. While recognising country-specific circumstances, lessons, opportunities and challenges are explored with a view to future improvements in the design and implementation of the LPT. Lessons from the LPT experience are the importance of tax administration and the role of the central tax collection agency, and, in terms of design, the need for a tailored approach to suit local circumstances. Challenges include the rates/LPT mix and the relative tax burdens on non-residential and residential properties, the long-term sustainability of the LPT arising from design issues, the current low tax rate and future revaluations, and, finally, the need for regular property tax reform because of political and taxpayers’ opposition to a highly visible, unpopular but good local tax.

Irish Property Price Estimation Using A Flexible Geo-spatial Smoothing Approach: What is the Impact of an Address?

Accurate and efficient valuation of property is of utmost importance in a variety of settings, such as when securing mortgage finance to purchase a property, or where residential property taxes are set as a percentage of a property’s resale value. Internationally, resale based property taxes are most common due to ease of implementation and the difficulty of establishing site values. In an Irish context, property valuations are currently based on comparison to recently sold neighbouring properties, however, this approach is limited by low property turnover. National property taxes based on property value, as opposed to site value, also act as a disincentive to improvement works due to the ensuing increased tax burden. In this article we develop a spatial hedonic regression model to separate the spatial and non-spatial contributions of property features to resale value. We mitigate the issue of low property turnover through geographic correlation, borrowing information across multiple property types and finishes. We investigate the impact of address mislabelling on predictive performance, where vendors erroneously supply a more affluent postcode, and evaluate the contribution of improvement works to increased values. Our flexible geo-spatial model outperforms all competitors across a number of different evaluation metrics, including the accuracy of both price prediction and associated uncertainty intervals. While our models are applied in an Irish context, the ability to accurately value properties in markets with low property turnover and to quantify the value contributions of specific property features has widespread application. The ability to separate spatial and non-spatial contributions to a property’s value also provides an avenue to site-value based property taxes.

Assessment of the relationship between community services and taxpayers’ willingness to pay residential property tax in Lagos metropolis

Property tax which is considered a suitable local source of revenue is facing serious threats as a result of the present state of Nigeria community services. This study therefore assessed the condition of community services in Lagos metropolis with the view to determining taxpayers’ willingness to pay (WTP) residential property tax. Primary data was used for the study. The data were sourced through the use of questionnaire administered to the users of the residential properties that have been assessed for rating purposes in the study area. 4026, questionnaires were administered to Residential property owners. While 2181(54.17%), were returned and analysed. The community service condition index (CSI), an index number that indicates the current condition of the services measured in relation to its ideal ‘Perfect’ condition, adopted from Australian Association of Higher Education facilities officers (2010) was used to rate the community service condition in the study area. The result revealed that there is direct relationship between improvement in the condition of community services and taxpayers’ willingness to pay residential property tax. The study concludes that Lagos state government has the potential to generate the largest share of its revenue from property tax, if judiciously spend the revenue for the provision and upgrading of the existing community services in the study area. The study therefore recommends that Lagos state government should declare state of emergency in the provision of community services, this will improve rental value of residential properties in the area, thus increases taxpayers’ willingness to pay residential property tax.

Spatial diversification of property tax policy – Searching for yardstick competition in Polish metropolitan areas

This article contributes to the ongoing debate on local tax policy-making, in particular regarding yardstick competition in the area-based property taxation system. Based on data from 300 municipalities located in ten metropolitan areas in Poland over ten years, we identify whether we are faced with tax mimicking induced by political considerations in tax rates setting. In particular, we seek to identify whether the spatial interdependence of property tax rates set by local governments of Polish municipalities is driven by a yardstick competition mechanism.The analytical approach is based on the estimation of the spatial residential property tax reaction function by using spatial autoregressive panel models. In order to verify the presence of yardstick competition, we include a set of purely political variables in the models and test their impact on tax rate decisions.The results confirm the evidence of yardstick competition, which, however, is present only in a few of the examined metropolitan areas. We found nominal tax rates for residential buildings that were significantly lower in election years, and empirical evidence of several political factors influencing local tax policies in Poland.

주택분 재산세의 가격기능에 관한 연구: 서울시 25개 자치구 공공서비스를 대상으로

주택분 재산세의 가격기능에 관한 연구: 서울시 25개 자치구 공공서비스를 대상으로

The Effects of Property Tax Abatements on School District Property Tax Bases and Rates

The authors analyze the effects of property tax abatement on the property tax base and rates of school districts within a municipality offering the abatement using data from Franklin County, Ohio, one of the most populous counties in the United States. An increase in a school district’s Community Reinvestment Area abatement intensity correlates with (a) a decrease in the mill rate for real property, (b) a decrease in effective residential and nonresidential property tax rates, and (c) an increase in total market value of property. While these effects are small, they indicate that a municipality’s decision to abate has generated enough growth in property values, either through improvements to physical property or positive capitalization for existing property values, to offset the negative effects of an abatement. The reason for this may be that the restrictions and oversight used in this abatement program are greater than in most other places.

Households' public library use across the school calendar

When schools are on break, some households may be constrained to provide educational resources to their children. Public libraries could be low-cost providers of materials and services that foster educational investment. This research extends existing literature by combining household-level data (public library checkout counts, residential property tax assessment values, student enrollment rosters, and distance to public library measures) to conduct a panel analysis of public library use across the public school calendar. The empirical analyses find that public- school breaks generally impact library use for households with children in public school, but not for households without children in public school or for the lowest socioeconomic status households with children in public school. Distance to library is found to be negatively correlated with public library use for all households, but differentially and dependent on households' socioeconomic status and structure. Lastly, community events and weather are identified to impact use.

A Roadmap to Municipal Reform: Improving Life in Canadian Cities

Oct. 25, 2018 – Cities across Canada have the greatest effect of any level of government on the daily lives of Canadians, yet city councils seem hamstrung by the problems they face. There are solutions, according to a new book from former C.D. Howe Institute Associate Director, Research, Benjamin Dachis. In “A Roadmap to Municipal Reform: Improving Life in Canadian Cities,” Dachis addresses the greatest issues all cities face, from traffic congestion to housing affordability, and offers compelling policy solutions. Written from the point of view of a typical city resident, getting to work through traffic congestion, paying her utility bills, trying to understand why her city council always seems short of money, or trying to buy an affordable house, the book recommends fixes to these problems. The problems facing Canada’s cities are well-known. The solutions aren’t. And residents are the ones suffering the consequences. Dachis’s book, written while he was at the C.D. Howe Institute, contains policy recommendations that, if adopted, would make the lives of ordinary residents easier and more affordable. Dachis covers three big themes on how cities can do better. Part One looks at the way cities finance themselves and, through their budget plans, lay out the broad directions for their policies and administration. Part Two covers how cities spend the money they collect, both on day-to-day operations and on infrastructure. Part Three looks specifically at housing policies – at the way municipal governments are making homes more expensive to own and rent, and how they can fix that problem. Excerpts: On Fixing Municipal Finances “The common misperception that cities are broke stems from the way they set their budgets. Cities do not need additional tax powers beyond their traditional tax base of residential property taxes and user fees…. if we use the same financial accounting language for municipalities as the federal and provincial governments use, our understanding of municipal finances will change dramatically. Simply by adopting this more accurate language, a major misconception will have been removed.” On Getting Better Municipal Services “The core driver of municipal expenses is labour costs – they are already high and are increasing quickly. Contracting services on a competitive basis can dramatically reduce costs while simultaneously increasing service reliability and quality, as seen in Toronto’s waste collection services.” On the Costs and Causes of High Housing Prices: “Aside from Toronto and Vancouver, house prices in Canada have not historically gotten out of control. Even during its economic boom, house prices in Calgary barely budged. In Montreal and Ottawa, two cities that have seen recent solid economic growth, house prices were flat from 2007 through 2016. I look at the local-policy-driven causes of high house prices in Toronto and Vancouver and what to do about it.” On Better Water and Wastewater Services “Municipalities and provinces can better meet the goals of optimal pricing and lower costs through economies of scale. To do so, they should create standalone utility corporations to operate regionally under the watchful eye of independent regulators.” Life for millions of people in Canada’s urban areas can go from good to great with a few simple changes, concludes Dachis. All Canadian cities can improve how they present their financial information. They can reduce their tax burden on businesses and cut traffic congestion by putting a price on roads. They can build more infrastructure by encouraging private dollars to invest in it. They can properly price water so as not to waste it, and at the same time they can cut the cost of housing.

Housing demolition and property tax delinquency: Evidence from Detroit

ABSTRACT The purpose of this article is to evaluate the degree to which the demolition of low-quality structures affects property tax compliance in Detroit. During the real estate crisis, the rate of property tax delinquency in the city exceeded 50%. The demolition of dilapidated structures could lead to improvements in tax compliance in two ways. The first is through an amenity effect: removal of blighted structures improves the neighborhood and thus may increase the likelihood that neighbors pay their property taxes. The second is via the existence of a peer effect in property tax compliance decisions. We use a 6-year panel database to examine the degree to which demolitions affect nearby residential property tax delinquency. Even though we are unable to disentangle the amenity and peer effects, our analysis shows that when a dilapidated property is demolished, tax delinquency within the neighborhood is reduced, providing evidence that demolitions improve tax compliance.

Shared Residential Occupancy and Property Tax Compliance

This article examines for the first time the property tax compliance behavior of homeowners who rent out part of their own home to tenants. This increasingly popular occupancy arrangement typically arises due to the financial constraints of homeowners. Currently little is known about the property tax compliance behavior of homeowners in this shared occupancy arrangement, relative to homeowners who fully occupy their properties. Using granular administrative-level data on occupancy characteristics from the Accra Metropolitan Assembly (AMA) in Ghana, we find that owner-and-tenant-occupied dwelling units have a higher probability of being in tax arrears, as compared to owner-occupied units. Their non-compliance is more sensitive to increases in property tax rates and is greater for those located farther away from local public amenities (suburban police stations and hospitals). Overall, our findings provide new insights for policy-makers on the tax compliance of owner-and-tenant-occupancy arrangements in a weak regulatory environment.

Why are Residential Property Tax Rates Regressive?

Among single-family homes that enjoy the same set of property tax-funded amenities and pay the same statutory property tax rate, owners of cheap houses pay almost 50% higher effective tax rates than owners of expensive houses. This pattern appears throughout the United States and is caused by systematic assessment regressivity -- cheap houses are over-assessed relative to expensive houses. I use an instrumental variable approach to show that a large portion of this pattern can be attributed to measurement error in sale prices. Sixty percent of the remaining regressivity can be explained by tax assessors' flawed valuation methods that ignore variation in priced house and neighborhood characteristics and 40% by infrequent reappraisal. A simple valuation method can alleviate assessment regressivity and increase poor homeowners' net worth by more than 10%.

Measuring the Efficiency, Equity, and Success of Philadelphia’s Residential Property Tax Abatement

Philadelphia’s 10-year property tax abatement program is a tax expenditure meant to stimulate economic development through residential construction and renovation. In an era when many cities appear to be experiencing renewed growth after the urban decline of the late 20th century, it may be time to reevaluate these sorts of economic development policies. This article explores three possible ways to evaluate Philadelphia’s tax abatement as a case study for other cities with similar programs and asks whether it is the appropriate time to either restrict or end the program. The article assesses the abatement for its efficiency and equity, but most importantly, for whether and how well it achieved its goals. Based on this evaluation, Philadelphia’s policy does not hold up well against the efficiency and equity criteria and its goals are either too broad to measure, or impossible to evaluate without a similar city to compare against. As a part of the analysis, the author considers the key questions of how much of the city’s real estate comeback is directly due to the abatement and how to best reshape the policy to target Philadelphia’s goals in 2018. The article also presents examples of abatement policies from other cities as models of how to shape such programs to fit a local context. The author finds that Philadelphia and cities with similar policies should look to other cities’ targeted abatement programs and evaluate local priorities for growth when considering restrictions or terminations of their programs.

Property values and tax rates near spent nuclear fuel storage

This paper examines potential property value impacts when a nuclear power plant closes and spent fuel remains on site. We confirm earlier research that fails to find an impact on property values of proximity to a nuclear power site. Another contribution of this paper is our finding that a one percentage point increase in property taxes is associated with a 4.31% decrease in the sale price of a home. These results provide evidence for a positive impact of operating nuclear facilities on surrounding communities in the form of reduced residential property taxes for a given level of public expenditures.

WHO WINS RESIDENTIAL PROPERTY TAX APPEALS

This article explains who wins residential property tax appeals in Cook County, Illinois. It does so by collecting and combining public sector data, which has been recently released by the Cook County Assessor. The article then uses this data to compute three statistics. Lastly, it contextualizes each statistic in order to determine if some townships, or groups of townships, win more appeals than expected. 210 COLUMBIA JOURNAL OF TAX LAW [Vol.6:209

Macroeconomic policies and housing market in Taiwan

This paper develops a dynamic stochastic general equilibrium (DSGE) model that analyzes the transmission mechanisms of a real estate transfer tax and other macroeconomic policies on Taiwan's housing market. Our model matches the volatility of Taiwan's housing prices and housing transactions during 2011–2015, when the loan-to-value ratio was reduced and a transfer tax along with a property tax were collected. The calibration results indicate that imposing a residential property tax or raising interest rates effectively curbs speculative housing transactions and has prolonged effects on taming housing prices over time. Transfer tax imposition or a decrease in the loan-to-value ratio has short-lived effects on moderating housing markets.

Brownfields Remediation: Impact on Local Residential Property Tax Revenue

The US Environmental Protection Agency (EPA) Brownfields Program provides grants to assess and clean up brownfields. There are few studies that estimate tax revenue impacts from cleanup beyond those generated directly from within the remediated site’s property lines. This study estimates the increased residential property tax revenue attributable to brownfields cleanup at 48 sites remediated between 2004 and 2011 under the EPA Brownfields Cleanup Grants Program. Findings from a previous study of a 5% to 15.2% property value increase following cleanup at these sites are applied to the assessed values of nearby residential properties along with local tax laws, assessment ratios, and rates to estimate tax revenue gained as a result of brownfields cleanup. The estimated increase in residential property tax revenue for a single tax year from remediating 48 brownfields properties was between $29 million and $97 million (2014 USD).